Tribunal reduces on-money addition, recompute surplus, aligns taxation method for business income.

The Tribunal allowed the assessee's appeal, reducing the addition of on-money payments from Rs. 2,11,00,650 to Rs. 45 lakhs, citing insufficient evidence. The Tribunal directed the Assessing Officer to recompute the surplus on the transfer of Plot No. 206. Additionally, the Tribunal partially allowed the assessee's claim for expenses incurred and aligned the taxation of business income from the sale of Powai land with the project completion method. The Tribunal also deleted the entire addition of estimated on-money received by the assessee, as there was no basis for retention.

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Issues Involved:
1. Addition of on-money payments.
2. Claim of loss on assignment of Plot No. 206.
3. Disallowance of expenses incurred by the assessee.
4. Addition of business income on the sale of Powai land.
5. Confirmation of addition of estimated on-money received by the assessee.

Summary:

1. Addition of On-Money Payments:
The department's additions aggregating to Rs. 2,11,00,650 based on documents seized during a raid were reduced by the CIT (Appeals) to Rs. 45 lakhs. The CIT (Appeals) relied on a report by the National Institute of Public Finance and Policy and circumstantial evidence. The assessee contended that the additions were based on hearsay and the testimony of a disgruntled employee, Shri R.T. Sharma. The Tribunal found no tangible evidence of on-money payments and deemed the report insufficient to substantiate the additions. The appeal by the assessee was allowed, and the cross appeal by the department was dismissed.

2. Claim of Loss on Assignment of Plot No. 206:
The assessee claimed a loss of Rs. 1,85,000 on the transfer of Plot No. 206, which was initially acquired in exchange for Powai land. The CIT (Appeals) treated the land as stock-in-trade and partially allowed the claim. The Tribunal held that the surplus from the sale should be taxed in the year of completion of the project (1982-83) and not in 1974-75. The Assessing Officer was directed to recompute the surplus after considering reclamation and other expenses.

3. Disallowance of Expenses Incurred by the Assessee:
The assessee's claim of Rs. 5,83,905 for expenses incurred during 1977-82 was partially disallowed by the Assessing Officer. The Tribunal allowed a relief of Rs. 50,000 on an estimated basis, considering certain disallowable items and inadequate reasons for disallowance of other expenses.

4. Addition of Business Income on the Sale of Powai Land:
The CIT (Appeals) upheld the addition of Rs. 39,85,892 as business income from the sale of Powai land for the assessment year 1974-75. The Tribunal, however, held that the surplus should be taxed in 1982-83, aligning with the project completion method followed by the assessee. The appeal for 1974-75 was allowed.

5. Confirmation of Addition of Estimated On-Money Received by the Assessee:
The CIT (Appeals) confirmed the addition of Rs. 15,45,000 as estimated on-money received by the assessee on sales post 30-5-1970. The Tribunal, referencing its decision in a related case, found no basis for retaining the addition and deleted the entire amount. The assessee's appeal was allowed, and the department's appeal was dismissed.

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